MARANAW HOTEL RESORT CORPORATION (CENTURY PARK SHERATON MANILA), PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION AND GINA G. CASTRO, RESPONDENTS.

This special civil action of certiorari raises
the issue of whether the National Labor Relations Commission (NLRC) acted with
grave abuse of discretion in ordering the payroll reinstatement of an employee
despite its resolution reversing the decision of the Labor Arbiter and
declaring that there was no illegal dismissal.

The factual and procedural antecedents in this case are in the
main not disputed.

On 16 June 1990, private respondent Gina G. Castro was hired on a
probationary basis for six months as a guest relations officer of the Century
Park Sheraton Hotel, a five-star hotel located at Malate, Manila, owned by the
petitioner.^[1]
On 10 November 1990, she was dismissed on the ground of failure to meet the
standards set forth in her probationary employment contract.^[2]
She then filed on 13 November 1990 with the Arbitration Branch of the National
Capital Region of the NLRC a complaint for illegal dismissal with
reinstatement, back wages, and damages against the hotel and its former general
manager, Peter Grieder.^[3] The
case was docketed as NLRC-NCR Case No. 00-11-06059-90.

On 23 December 1991, the Labor Arbiter rendered a decision^[4]
in favor of the private respondent. The
dispositive portion thereof reads as follows:

“WHEREFORE, premises
considered, judgment is hereby rendered as follows:

1. Declaring the dismissal of complainant Gina G. Castro by respondents to
have been illegally effected;

2. Ordering respondents to immediately
reinstate complainant to her former position or substantially equivalent
position without loss of seniority rights
including the payment of backwages in the amount of Eighty-Eight Thousand Six
Hundred Twenty Pesos (P88,620.00);

3. Respondents are further ordered to pay the amount of Two Thousand
Eight Hundred Pesos (P2,800.00) for unpaid 13th month pay and Nine Thousand One
Hundred Forty Two Pesos (P9,142.00) as ten (10%) per cent attorney’s fees,
which is equivalent to ten (10%) per cent of the awards herein;

4. As to the claims for damages, the same is hereby ordered dismissed for
lack of merit.

SO ORDERED.”^[5]

The petitioner received a copy of the decision on 28 January
1992. On 7 February 1992, within the
10-day reglementary period, it filed an appeal^[6] to
the NLRC alleging therein that the Labor Arbiter committed abuse of discretion
and serious error in his findings of fact
and conclusions of law. It also claimed
that the Labor Arbiter erred in ruling that the monthly salary of the private
respondent is P7,000.00 when it should have been P3,403.00. Also, on 7 February 1992, it filed an
Omnibus Motion For Extension Of Time To File Surety Bond And To Reduce Amount
Of Bond^[7]
since by reason of the above error as to the monthly salary, the back salaries
should only have been P40,836.00 and not P88,620.00 and the 13th-month pay
should only have been P1,134.00 and not P2,800.00. Thus, the total amount due the private respondent should only be
P41,970 and not P91,420.00. This motion
was not resolved by the Labor Arbiter.

On 17 February 1992, the private respondent filed a motion for
the execution of the decision^[8] on
the ground that the petitioner did not file the memorandum of appeal and appeal
bond and that the order of reinstatement was immediately executory. This motion was likewise not resolved.

On 14 July 1992, the petitioner filed a surety bond in the amount
of P100,562.00^[9]
to answer for the monetary award based on the erroneous computation by the
Labor Arbiter.^[10]

In its resolution of 25
March 1993,^[11] the NLRC (Second Division) reversed the decision of the Labor Arbiter
and dismissed the complaint for lack of merit. It held that there was no illegal dismissal but rather a failure of the
private respondent to comply with the petitioner’s standards for permanent
employment. It then made the following
observations:

“It appears however that on March 13, 1992, complainant filed a
Motion For Execution Pending Appeal which motion was inadvertently not acted
upon.

Article 223 of the Labor Code provides among others, as follows:

‘In any event, the decision of the Labor Arbiter reinstating a
dismissed or separated employee, insofar as
the reinstatement aspect is concerned, shall
immediately be executory, even pending appeal. The employee shall either be admitted back
to work under the terms and conditions prevailing prior to his dismissal or
separation or, at the option of the employer,
merely reinstated in the payroll. The posting of a bond by the employer shall not
stay the execution for reinstatement provided therein.’ (Underscoring supplied)

In view of the aforequoted provision, complainant should be
considered on payroll reinstatement, as of the date of the filing of the Motion
For Execution up to the date of the promulgation of this Resolution and thus
pay [sic] her salaries corresponding to that period based on P4,800.00 a month
which was her salary at the time of her dismissal.”

and ultimately decreed thus:

“WHEREFORE, finding the appeal to be impressed with merit, the
decision appealed from is hereby REVERSED and SET ASIDE and a new one entered
dismissing the complaint for lack of merit.

However, respondents are hereby ordered to pay complainant Gina C.
Castro her salaries corresponding to the period March 13, 1992 up to the date
of the promulgation of this Resolution computed at P4,800.00 per month.

SO ORDERED.”^[12]

Its motion for partial reconsideration^[13]
seeking to delete the portion of the decision ordering it to pay the private
respondent the sum of P4,800.00 per month from 13 March 1992 up to 25 March
1993 having been denied by the NLRC for lack of merit,^[14]
the petitioner filed the instant case raising the sole issue of whether the
NLRC gravely abused its discretion in decreeing the payroll reinstatement of
the private respondent and ordering the petitioner to pay the private
respondent.

It maintains that the filing of the motion for execution pending
appeal did not entitle the private respondent to payroll reinstatement because
this is an option granted to the employer by Article 223 of the Labor Code and
the operative act therefor is the exercise by the employer of such option upon
the service upon it of the writ of execution for the reinstatement of the private
respondent. In the instant case, the
motion for execution was not acted upon and no writ of execution was
issued. Hence, there was no occasion
for the petitioner to exercise its option and the NLRC’s order was, in effect,
an order for the payment of salary to a party for the period during which she
did not work, which is violative of the rule of “no work, no pay.” Moreover,
the order is inconsistent with the ruling that the private respondent was
validly dismissed.

We required the
respondents to comment on the petition.

In her comment^[15] filed on 14 September 1993, the private
respondent side-steps the merits of the issue raised in the petition; instead,
she assails the validity of the NLRC resolution and prays that the same be
declared null and void because the petitioner’s appeal to the NLRC was not
perfected on time due to the petitioner’s failure to put up the required surety
bond within the 10-day reglementary period. She further asks that the case be remanded to the NLRC for the execution
of the decision of the Labor Arbiter. The petitioner controverts these claims in its reply.^[16]

In its Manifestation in Lieu of Comment^[17]
filed on 12 October 1993, the Office of the Solicitor General maintains that
the assailed resolution of the NLRC is not in accordance with law. It prays that the NLRC be given a new period
within which to file its comment, which we granted.

In its comment^[18] filed on 14 March 1994, the NLRC contends
that its challenged resolution is correct.

It must be stressed that the private respondent did not challenge
the resolution of the NLRC reversing the decision of the Labor Arbiter and
dismissing her complaint for illegal dismissal and it is only in this action
that she questioned the timeliness of the petitioner’s appeal to the NLRC. We have ruled that the issue of the
timeliness of an appeal from the decision of the Labor Arbiter to the NLRC may
not be raised for the first time before this Court.^[19]
The proper step that the private respondent should have taken was to file with
the NLRC a motion to dismiss the appeal and to remand the records on the ground
that the decision had become final and executory.^[20]

The sole issue thus
presented for our determination is whether or not the NLRC acted with grave
abuse of discretion in holding that the private respondent should be considered
as reinstated in the payroll from the filing of the motion for execution on 13
March 1992 until the promulgation of its resolution and, as a necessary
consequence, ordering the petitioner to pay the private respondent her salaries
corresponding to the period from 13 March 1992 up to 25 March 1993 when its
resolution was promulgated.

We agree with the petitioner that the NLRC acted with grave abuse
of discretion. The petition should thus
be granted.

The resolution of the issue is found in the third paragraph of
Article 223 of the Labor Code which reads:

“In any event, the decision of the Labor Arbiter reinstating a
dismissed or separated employee, insofar as the reinstatement aspect
is concerned, shall immediately be executory,
even pending appeal. The employee shall either be admitted back to work under the terms and
conditions prevailing prior to his dismissal or separation or, at
the option of the employer, merely reinstated
in the payroll. The posting of a bond by the employer shall not stay the execution for
reinstatement provided herein.” (emphases supplied)

This paragraph was inserted by Section 12 of R.A. No. 6715, which
took effect on 21 March 1989. In Aris (Phil.) Inc. vs. National Labor
Relations Commission,^[21] we sustained its constitutionality as an exercise of the
police power of the state and further ruled that since appeal is a privilege of
statutory origin, the law may validly prescribe limitations or qualifications
thereto or provide relief to the prevailing party in the event an appeal is
interposed by the losing party.

It is clear from Article 223 that if execution pending appeal is
granted, the employee concerned shall be admitted back to work under the terms
and conditions prevailing prior to his dismissal or separation. However, instead of doing so, the employer
is granted the option to merely reinstate the employee in the payroll. This would simply mean that although not admitted
back to work, the employee would nevertheless be included in the payroll and
entitled to receive her salary and other benefits as if she were in fact
working.

It must be stressed, however, that although the reinstatement
aspect of the decision is immediately executory, it does not
follow that it is self-executory. There must be a writ of execution which may be issued motu proprio or on motion of an interested
party. Article 224 of the Labor Code
provides:

“ART. 224. Execution of
decisions, orders or awards. — (a)
The Secretary of Labor and Employment or any Regional Director, the Commission
or any Labor Arbiter, or med-arbiter or voluntary arbitrator may, motu proprio or
on motion of any interested party, issue a writ of
execution on a judgment within five (5) years from the date it becomes final
and executory….” (emphasis supplied)

The second paragraph of Section 1, Rule VIII of the New Rules of
Procedure of the NLRC also provides:

“The Labor Arbiter, POEA Administrator, or the Regional Director,
or his duly authorized hearing officer of origin shall, motu proprio or
upon motion of any interested party, issue a writ of execution on a
judgment only within five (5) years from the date it becomes final and
executory …. No motion for execution
shall be entertained nor a writ
be issued unless the Labor Arbiter is in possession of the records of the case
which shall include an entry of judgment.” (emphasis supplied)

In the instant case, the Labor Arbiter neither issued motu proprio a writ of execution to enforce the
reinstatement aspect of his decision nor acted on the private respondent’s
motion for execution filed on 13 March 1992. The NLRC did not also resolve it prior to the promulgation of its
decision more than a year later or on 23 March 1993. The pleadings before us do not show that the private respondent
had filed a motion to resolve the motion for execution or that she had, by any
other means, called the attention of the NLRC to such motion for
execution. The private respondent may
therefore be deemed to have abandoned her motion for execution pending appeal.

In the absence then of an order for the issuance of a writ of
execution^[22]
on the reinstatement aspect of the decision of the Labor Arbiter, the
petitioner was under no legal obligation to admit back to work the private
respondent under the terms and conditions prevailing prior to her dismissal or,
at the petitioner’s option, to merely reinstate her in the payroll. An option is a right of election to exercise
a privilege,^[23]
and the option in Article 223 of the Labor Code is exclusively granted to the
employer. The event that gives rise for
its exercise is not the reinstatement decree of a Labor Arbiter, but the writ
for its execution commanding the employer to reinstate the employee, while the
final act which compels the employer to exercise the option is the service upon
it of the writ of execution when, instead of admitting the employee back to his
work, the employer chooses to reinstate the employee in the payroll only. If the employer does not exercise this
option, it must forthwith admit the employee back to work, otherwise it may be
punished for contempt.^[24]

This option is based on practical considerations. The employer may insist that the dismissal
of the employee was for a just and valid cause and the latter’s presence within
its premises is intolerable by any standard; or such presence would be inimical
to its interest or would demoralize the co-employees. Thus, while payroll reinstatement would in fact be unacceptable
because it sanctions the payment of salaries to one not rendering service, it
may still be the lesser evil compared to the intolerable presence in the
workplace of an unwanted employee.

Since in the instant case no occasion arose for the petitioner to
exercise its option under Article 223 of the Labor Code with respect to the
reinstatement aspect of the decision of the Labor Arbiter, the NLRC acted with
grave abuse of discretion when it ordered that the private respondent should be
considered reinstated in the payroll from the filing of her motion for
execution until the promulgation of its resolution on 25 March 1993. As correctly contended by the Office of the
Solicitor General, the NLRC “arrogated unto itself the right to choose whether
to admit the dismissed employee back to work or to reinstate her in the
payroll, which right properly pertains to the employer.”^[25]
Worse, the NLRC resolution granted the unresolved motion for execution which
had been effectively abandoned through the private respondent’s inaction and
which, for obvious reasons, could no longer be properly resolved in a resolution
finally disposing the appeal. And since
the resolution reversed the decision of the Labor Arbiter and dismissed for
lack of merit the private respondent’s complaint for illegal dismissal, the
rationale for the order of payroll reinstatement is beyond us.

WHEREFORE, the petition is hereby GRANTED. The challenged resolution of the National
Labor Relations Commission of 25 March 1993 in NLRC-NCR Case No. 00-11-06059-90
is modified by deleting the portion thereof ordering the petitioner to pay the
private respondent her salaries corresponding to the period from 13 March 1992
up to the date of the promulgation of the resolution. The rest shall stand.

No pronouncement as to costs.

SO ORDERED.

Padilla, (Chairman), Bellosillo, Quiason, and Kapunan, JJ., concur.

^[1]
Rollo, 53-54.

^[2]
Rollo, 22-24; 37-39.

^[3]
Annex “C” of Petition; Id., 50.

^[4]
Annex “D” of Petition; Id., 53-62.

^[5]
Id., 61-62.

^[6]
Annex “E” of Petition; Rollo, 64. The appeal contains the Memorandum on Appeal.

^[7]
Annex “B” of Reply; Id., 126.

^[8]
Annex “F” of Petition; Id., 82-83.

^[9]
Annexes “C” and “C-1” of Reply; Id., 129-131.

^[10]
Id., 122.

^[11]
Annex “A” of Petition; Rollo, 34-48.

^[12]
Id., 46-48.

^[13]
Annex “G” of Petition; Rollo, 85-88.

^[14]
Annex “B” of Petition; Id., 49.

^[15]
Id., 101-107.

^[16]
Rollo, 117-124.

^[17]
Id., 140-150.

^[18]
Id., 161-166.

^[19]
Arrastre Security Association-TUPAS vs. Ople, 127 SCRA 580 [1984]; Rada vs.
NLRC, 205 SCRA 69 [1992].

^[20]
Diaz vs. Nora, 190 SCRA 404 [1990].

^[21]
200 SCRA 246 [1991].

^[22]
Under Section 2, Rule III of the Manual of Instructions for Sheriffs of the
NLRC, the writ of execution must issue in the name of the Republic of the
Philippines.

^[23]
Black’s Law Dictionary, Fifth ed., 986.

^[24]
Section 2, Rule III, Manual of Instructions for Sheriffs of the NLRC; Section
9, Rule 39, Rules of Court, which may be applied suppletorily pursuant to
Section 3, Rule I of the Manual.

^[25]
Rollo, 146.